A10109 Summary:

BILL NOA10109
 
SAME ASSAME AS S08844
 
SPONSORZebrowski
 
COSPNSR
 
MLTSPNSR
 
 
Relates to amending state construction and commodity contracts to provide equitable relief to contractors who have sustained unanticipated expenses by reason of construction materials price escalations.
Go to top    

A10109 Actions:

BILL NOA10109
 
04/29/2022referred to governmental operations
05/09/2022reported referred to ways and means
Go to top

A10109 Committee Votes:

GOVERNMENTAL OPERATIONS Chair:Zebrowski DATE:05/09/2022AYE/NAY:14/0 Action: Favorable refer to committee Ways and Means
ZebrowskiAyeLawlerAye
GalefAyeGoodellAye
GlickAyeLalorAye
KimAyeByrneAye
BichotteAye
HyndmanAye
WilliamsAye
EpsteinAye
WallaceAye
MeeksAye

Go to top

A10109 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A10109
 
SPONSOR: Zebrowski
  TITLE OF BILL: An act in relation to amending state construction and commodity contracts to provide equitable relief to contractors who have sustained unanticipated expenses by reason of construction materials price escalation; and providing for the repeal of such provisions upon the expiration thereof   PURPOSE: The bill will allow contractors who submitted bids to the State of New York or a public benefit corporation prior to April 1, 2020 to receive an adjusted contract on materials costs where the price escalated in excess of five (5) percent upon invoice or purchase of said materials from the original bid.   SUMMARY OF PROVISIONS: Section 1 is the declaration of policy and statement of purpose. Section 2 will enable contractors holding construction contracts as awarded by the State of New York or a public benefit corporation upon bids submitted prior to April 1, 2020 but only for which materials were purchased or invoiced after March 1, 2020, that experienced an increase in the cost of acquisition of such materials in excess of five percent (5%) be able to apply for an adjustment to their contract in order to recoup the increased material costs. In cases of a state department or agency, any such increase in contract price will require the approval of the state comptroller. Contractors requesting an adjustment will have to apply in writing, submitting evidence to the department, board, agency or public benefit corporation that awarded the contract. This section also accounts for changes to be made if there is a de-escalation in costs from the original bid. Section 3 authorizes the Commissioner of the Office of General Services (OGS), with approval from the state comptroller, in contracting for commodities to terminate or suspend for a part of its term any state contract award for the purchase of commodities upon written application where increases in cost due to unforeseen circumstances have cost increases in excess of five percent (5%) in the vendor's costs for construction materials or other physical elements that were purchased or invoiced after March 1, 2020, that will result in a net loss for the contractor unless the contract is suspended or terminated. In cases where the contractor has incurred or will incur net losses, the Commissioner of OGS is authorized to grant an increase or increases in the prices of the commodities specified in the contract to prevent further loss to the contractor. This also applies to the ability to make adjustments should prices de-escalate. Requires contractor documenta- tion including records, books and documents related to any adjustments to be made by the commissioner of OGS that are subject to the approval of the state comptroller to be required to be available for audit and examination. Section 4 provides for the effective date.   JUSTIFICATION: Similar language was enacted by the State Legislature in 2004 to aid contractors with sharp increases in steel prices. This language is once again put forth to ensure that entities who entered into construction contracts after public bidding with New York State or its public benefit corporations prior to April 1, 2020, in which said contracts do not include clauses to allow for significant price shifts in material costs are not saddled with losses due to the unforeseen impact of the COVID-19 global pandemic on the world's supply chain on the acquisition of mate- rials.   LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: To be determined.   EFFECTIVE DATE: The act shall take effect immediately and shall expire and be deemed repealed on June 30, 2023.
Go to top

A10109 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                          10109
 
                   IN ASSEMBLY
 
                                     April 29, 2022
                                       ___________
 
        Introduced  by  M.  of  A.  ZEBROWSKI  --  read once and referred to the
          Committee on Governmental Operations
 
        AN  ACT  in  relation  to  amending  state  construction  and  commodity
          contracts   to  provide  equitable  relief  to  contractors  who  have
          sustained unanticipated expenses by reason of  construction  materials
          price escalation; and providing for the repeal of such provisions upon
          the expiration thereof
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Declaration of policy and statement of purpose. It being in
     2  the vital interest of the general public that public works in the  state
     3  of  New York be administered efficiently and at a reasonable and equita-
     4  ble cost; and, the unforeseen emergency of unanticipated  escalation  in
     5  construction  materials  prices having imposed substantial inequity upon
     6  contractors who have heretofore  been  awarded  contracts  after  public
     7  bidding; and, such inequity having threatened the ability of contractors
     8  to  fulfill  contracts so awarded; and, in order to perpetuate the bene-
     9  fits derived by the general public from the existing  system  of  public
    10  bidding,  and  to  assure  the continuance of the orderly performance of
    11  contracts heretofore awarded as a result of such public bidding; and, it
    12  being in the best interest to provide equitable relief to those contrac-
    13  tors who, having been awarded public contracts, have sustained damage by
    14  reason of such construction materials  price  escalation,  this  act  is
    15  hereby enacted.
    16    §  2.  Whenever  the  terms  and conditions of a construction contract
    17  awarded by the state of New York or a public benefit  corporation  based
    18  upon  bids submitted prior to April 1, 2020 but only for which materials
    19  were purchased or invoiced after March 1, 2020, require a contractor  to
    20  furnish materials in such contract pertaining to such construction mate-
    21  rials  may  be  adjusted upon a determination made by the officer of the
    22  department, board, agency or public  benefit  corporation  that  awarded
    23  such contract that there has been an increase in the cost of acquisition
    24  by  the contractor, subcontractor or supplier of materials of such mate-
    25  rials in excess of five percent, determined as of the time of the award.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD15088-03-2

        A. 10109                            2
 
     1  Such a determination shall be based upon the available evidence, includ-
     2  ing but not limited to, an appropriate  nationally  recognized  economic
     3  index published by the United States department of labor or other appro-
     4  priate  organization.  In the case of any state department or agency any
     5  such increase in contract price shall be subject to the approval of  the
     6  state comptroller.  Any contractor, subcontractor or supplier of materi-
     7  als who receives an increase in the cost of construction materials shall
     8  also be subject to a downward adjustment in construction materials pric-
     9  es  for subsequent de-escalation which may result in a price being lower
    10  than the original bid price. Any  contractor  requesting  an  adjustment
    11  shall make application in writing submitting documentary evidence to the
    12  office  of  the  department, board, agency or public benefit corporation
    13  that awarded the contract establishing such increase in accordance  with
    14  the  requirements  of  the  department,  board, agency or public benefit
    15  corporation, which evidence shall be subject to public inspection during
    16  regular business hours. Any subsequent decrease or  de-escalation  shall
    17  be  made  upon  a determination by the officer of the department, board,
    18  agency or public benefit corporation that  awarded  such  contract  that
    19  there  has been a subsequent decrease in the cost of acquisition of such
    20  construction materials by the contractor, subcontractor or  supplier  of
    21  materials.  Such  a  determination  shall  be  based  upon the available
    22  evidence, including but not limited to, an appropriate nationally recog-
    23  nized economic index published by the United States department of  labor
    24  or  other  appropriate organization.  Upon the agreement of the parties,
    25  the contract may be amended in  writing  to  reflect  the  increased  or
    26  decreased  cost  of  acquisition of such materials insofar as it exceeds
    27  five percent thereof and such contract amendment shall state the  amount
    28  of adjustment and the basis therefor, but in no event shall direct labor
    29  costs,  additional profit or overhead be part of such adjustment. To the
    30  extent a construction contract is subject to approval by the state comp-
    31  troller, and as to the form and manner of  execution,  by  the  attorney
    32  general,  every such contract amendment shall be subject to the approval
    33  of the state comptroller, and as to form and manner of execution, by the
    34  attorney general. No adjustment shall be granted  in  an  amount  which,
    35  together  with  any other sum obligated under the contract, shall exceed
    36  the money appropriated or otherwise lawfully available for the project.
    37    § 3. (a) The commissioner  of  general  services  in  contracting  for
    38  commodities  is  authorized, with the approval of the state comptroller,
    39  to terminate or suspend for a part of its term any state contract  award
    40  for the purchase of commodities upon written application for such termi-
    41  nation  or  suspension by the vendor, where extraordinary and unforeseen
    42  general market conditions have caused increases in  the  vendor's  costs
    43  for  construction  materials  or  other  physical elements consisting of
    44  construction materials to be sold under the contract, where the contract
    45  covers materials which were purchased or invoiced after March  1,  2020,
    46  and  the  commissioner  of  general  services  determines  upon evidence
    47  furnished by the vendor as required and deemed to be sufficient  by  the
    48  commissioner that as the direct and sole result of such increases during
    49  the  term of the contract, which exceed five percent of the contractor's
    50  aggregate acquisition costs determined as of the time of the award,  the
    51  contractor  has  incurred  or  will  incur  an  actual  net loss on such
    52  contract from the estimated  sales  made  under  the  contract  and  the
    53  contractor  would  continue to incur such net losses unless the contract
    54  is suspended or terminated. Such a determination shall be based upon the
    55  available  evidence,  including  but  not  limited  to,  an  appropriate

        A. 10109                            3
 
     1  nationally  recognized  economic  index  published  by the United States
     2  department of labor or other appropriate organization.
     3    (b)  The  commissioner  of  general  services  is  further authorized,
     4  following the determination made pursuant to the provisions of  subdivi-
     5  sion  (a) of this section that the contractor has incurred or will incur
     6  an actual net loss on such  contract  from  the  sales  made  under  the
     7  contract, to grant an increase or increases in the prices of the commod-
     8  ities specified by the contract, in amounts necessary to prevent further
     9  net losses to the contractor on such contract from deliveries to be made
    10  thereafter  under  the  contract,  as compensation for and not exceeding
    11  increases of the contractor's  acquisition  costs  during  the  contract
    12  term.  Any  such  increase  in  contract  prices shall be subject to the
    13  approval of the  state  comptroller.  Any  contractor  who  receives  an
    14  increase  in  the  price  of  the commodities shall also be subject to a
    15  downward adjustment in the  price  of  the  commodities  for  subsequent
    16  de-escalation  which may result in a price being lower than the original
    17  bid price. Any subsequent decrease or de-escalation shall be made upon a
    18  determination by the officer of the department, board, agency or  public
    19  benefit  corporation  that  awarded  such contract that there has been a
    20  subsequent decrease in the cost  of  acquisition  of  such  construction
    21  materials  by  the  contractor,  subcontractor or supplier of materials.
    22  Such a determination shall be based upon the available evidence, includ-
    23  ing but not limited to, an appropriate  nationally  recognized  economic
    24  index published by the United States department of labor or other appro-
    25  priate organization.
    26    (c)  All  records,  books  and  documents  of the contractor which are
    27  related or useful to the determinations  made  by  the  commissioner  of
    28  general  services and to the approval of the state comptroller hereunder
    29  shall be subject to audit and examination by the state comptroller.
    30    § 4. This act shall take effect immediately and shall  expire  and  be
    31  deemed repealed June 30, 2023.
Go to top